Deputy Prime Minister Hồ Đức Phớc Explains the Challenges of Withdrawing Funds from Insurance Policies

“Paying in is easy, but withdrawing is a challenge.”

On November 3rd, the National Assembly discussed the draft Law amending and supplementing certain provisions of the Insurance Business Law and the Law amending and supplementing certain provisions of the Public Debt Management Law.

Regarding the insurance sector, Deputy Chair of the Law and Justice Committee, Nguyen Thi Thuy, highlighted issues related to life insurance contracts. She mentioned that after reviewing several insurance contracts from different companies, even with her legal expertise, she found them “extremely difficult to understand.”

According to Nguyen Thi Thuy, each insurance contract spans dozens of pages filled with specialized financial and insurance terminology. Due to this complexity, policyholders often place their trust in advisors, who are frequently friends or acquaintances.

Addressing these practical challenges, Nguyen Thi Thuy suggested that the revised law should focus on the content of life insurance contracts. Beyond ensuring absolute honesty, the law should incorporate principles of transparency in these contracts.

Nguyen Thanh Hai, Chair of the Science, Technology, and Environment Committee, shared that despite never purchasing insurance herself, she had reviewed several contracts after hearing numerous complaints from constituents about the difficulty of withdrawing funds. Many policyholders, discouraged by lengthy contracts and complex addendums, simply forfeit their contributions.

“Even for those of us engaged in legal and research work, understanding insurance contracts is a challenge. The revised law must clarify the principle of ‘contribute and benefit easily,’” Nguyen Thanh Hai emphasized.

Additionally, she proposed the creation of a standardized insurance contract template, approved by relevant authorities. This template should be publicly available, and all insurance companies would be required to adhere to it. “This would minimize risks and streamline dispute resolution by focusing only on individual-specific issues,” she explained.

Insurance Brokers Complicate Withdrawals Due to “Commission-Based Earnings”

Deputy Prime Minister Ho Duc Phoc clarified that life insurance is a conditional business requiring a license. The law already includes a provision for economic contracts with basic content.

Regarding the absence of a standardized contract, Ho Duc Phoc explained that such a requirement would reduce flexibility for companies, especially foreign ones. Instead, all contracts must be approved by the Insurance Supervisory Authority (Ministry of Finance) before implementation. “Since this is voluntary insurance, the terms must be clear,” he stated.

On withdrawal difficulties, Ho Duc Phoc noted that while he personally found withdrawals straightforward, issues often arise not from insurers but from brokers. “Brokers earn commissions based on sales, creating technical hurdles to delay withdrawals,” he explained.

To address past challenges, the revised law includes provisions on cross-selling insurance, ensuring transparency and policyholder choice. For example, agents can sell multiple insurers’ products, and banks can offer insurance alongside loans, provided they maintain transparency for regulatory oversight.

Explaining restrictions on capital contributions from violators, Ho Duc Phoc stressed the need for clean capital to prevent money laundering and protect policyholders’ long-term interests. A minimum capital requirement of 750 billion VND ensures cautious management.

“During my tenure as Finance Minister, I never approved pension insurance, despite legal allowances, due to the need for thorough scrutiny. Corporate bankruptcy could harm citizens,” he shared.

Ho Duc Phoc concluded by emphasizing the importance of safeguarding policyholders’ long-term interests through transparency and vigilance against fraud and exploitation.